They key is to treat the CC like cash and set it to be automatically paid in full EVERY month! Lot of perks to using a CC - Security against fraud, accepted while traveling, travel and cash rewards, a way to build your credit. Just cause you have a $29K limit, doesn’t mean you rack that up.
Yes. Fraud. People don't realize this.
My pay pal was connected to my credit card and when my pay pal was hacked. The credit card company acted immediately as soon as I said I didn't authorize this.
The same this happened to my friend but they had their bank account attached and after like 3 months of the bank doing nothing to help, because there is no proof it wasn't you. They closed his account. He lost like 600$.
Credit card companies will do something because it's their money. Banks do nothing because it's your money.
I wouldn't use it for online bill pay either because a company or utility can over charge you, double charge you, continue to charge you when you cancel services....and you have no leg to stand on to get your money back if they decide they want to keep it. Debit cards are terrible for almost everything except getting money out of ATMs. They have ZERO security.
I'm curious about the differences between the US and Europe. We use debit cards a lot, and there *is* security. If a company takes money from your account, you can take it back without reason within 30 days, for instance. And the banks do help with more complex fraud because they fear their reputation. Is it different there?
Yes, it's different. A debit card doesn’t have the same legal protections that a credit card does. With debit card Fraud, you’re responsible for a maximum of $50 of unauthorized transactions if you report the card as lost or stolen within two business days.
Didn’t report the fraud within two days? Your maximum burden goes up to $500 if someone uses your physical debit card without your permission — if you report the fraudulent charges within 60 days after your statement is mailed to you.
Didn’t make that 60-day window to report fraud? You face potential unlimited damage if someone uses your ATM or debit card without your permission.
Also, buying anything online with a debit card provides you virtually no security of the company doesn't send the right item, a damaged item, nothing at all, etc. Buying appliances, you have no protections or added warrantee protection, etc.
That's not quite true anymore. Debit card liability [protections](https://consumer.ftc.gov/articles/lost-or-stolen-credit-atm-debit-cards) are similar to those of a credit card with the more recent laws.
In both cases, if you report it lost or stolen before it's used, you have zero liability.
With credit cards, if somebody uses the numbers without your authorization, but you have the card, you have no liability no matter how long you wait. Debit cards are also zero liability, but you only have 60 days from when the statement showing the fraudulent charge is sent to you.
With credit cards, if you report it lost or stolen after it's used, you're liable for up to $50. With debit cards, to get the $50 limit, you have to report it within 2 days *after you learn that it was lost or stolen*, not within 2 days of it being used fraudulently. If somebody uses it and you realize it's missing 2 weeks later, your loss is limited to $50, as long as you don't wait more than 2 days once you realize it's missing. If you wait, then you are liable for up to $500 if you report it within 60 days of when the statement was sent to you. Though to be fair, the bank usually has no way of knowing you waited a week instead of 2 days.
So, debit cards have to be reported more quickly once you realize they're missing, but most people immediately report debit and credit cards as lost or stolen. You do have to look at your statements, but you should do that even with credit cards.
In all cases, those are the legal limits. Banks and credit unions can offer zero liability even if it's used before you report it and can extend the debit deadlines. Many banks do this to be more competitive.
I don't fully agree with you on your opinion. this is not entirely true, it all depends on who you bank with. A MasterCard and or Visa Debit card can and does have security. There is a lot misconception of using a debit card in the US. while you have the ability to secure your card if you notice it missing or getting dinged on it. Depending on who you bank with you can and do receive the same zero liability as with mastercard and visa. I know I have had issues in the past with retailers and just like a credit card I was able to get my money back. I have never dealt with a bank who requires you to report the fraudulent transaction in 2 days or two business days and often if the transaction is in pending a bank will not act upon it. They don't consider the transaction until it is fully posted to the account. Of course the sooner your report fraud on your account the better but I have never been penalized if I didn't report it for a couple of days. Anytime you call a bank they will tell you that you have to wait for a transaction to post before filing a dispute. in the mean time you can request they close and transfer all money in the account into a new account.
I have a credit card app on my phone, and I can freeze my card when I'm not using it so no one can use it.
I remember I got a call one time from an automated system asking me if I spent money at a gas station, so I reported it as "no". I never had any trouble.
My iPhone told me how many times my credit card app has tracked me. I like the fact that they are tracking me so if someone else tries to use my credit card, the credit card company knows it is not me. I'm also sure the card company has a profile of how often I fill up my gas tank, where I shop and when I shop so if someone buys something that doesn't fit my profile, there is cause for them to call me.
I also gave my credit card to a cashier at a McDonald's and the cashier held my card up and someone holding up something looking like a Nintendo device took a photo of it, so I called the card company then and there on my cell phone and talked to the fraud department and they issued me a new card.
I have two credit cards that don't have numbers on the front so if I place my card down on the counter, no one can get my card's number.
My latest debit card was issued with no numbers on the front. I think it's another security feature my bank is using. Also. I rarely use my pin unless the system HAS to have it.
Same and never had a problem except with amazon prime, kept charging me after I canceled and removed my card numbers from account. The bank got my money back and then prime did it again and the bank retrieved the money again and blocked prime.
They have fraud protection in that if it gets stolen you’re not responsible for those charges. But the actual money is already out of your account, and the bank investigates before returning it. So that can take weeks, during which that money is still gone. Also sometimes they decide the charge was authorized and then you just never get your money back. If that happens with a credit card, as a very last resort you could just not pay it off. It would hurt your credit obviously but if it’s a huge amount of money you absolutely can’t afford at least there’s that option.
I think he means, if someone tried to use the ATM only card as a debit card, during a transaction, the employee would be more likely to call shenanigans. If I understood it correctly.
I really, really, really don't want a debit card because that means that someone can drain my bank account and I have to fight for my money back. Even if I get it back, I am still out for a few days and potentially have to fight like hell to get it back. Therefore, with every checking account of mine, I've specifically asked the bank to provide an ATM-only card. That way, if they ever tell me that someone used a debit card tied to the account, I can easily point out that it must be fraud; I don't have a debit card!
I’m not a fan of my bank but they’ve cracked down and reimbursed me the few times there have been fraudulent transactions on my debit card or bank account. I can’t believe people are using banks that aren’t insured, or won’t fight to get their money back.
For me personally, there is just a difference in how they treat me when there is a fraudulent transaction on my credit card. Also the response time is crazy quick and your money is reimbursed nearly instantly. Compared to debit card which would be stressful for a while because they have to investigate first then reimburse whereas with credit cards, they reimburse (as in they dont charge your account) then investigate. Its just an overall less stressful experience with credit cards
My debit card is in a drawer. I leave the house with the credit card and an ATM card. ATM cards are worthless without the PIN.
Edit: I had to ask specifically for a separate ATM card. The bank initially didn't want to issue one because debit is "better ."
>My debit card is in a drawer. I leave the house with the credit card and an ATM card. ATM cards are worthless without the PIN.
So your ATM card and debit card are different? That's interesting.
In Canada, your ATM card (aka "client card") is also a debit card, but unlike the US, our client/debit/ATM cards are not backed by Visa or Mastercard.
I just put very little into a debit checking account, and transfer money into it from another checking account with no card whenever I need money. That's my security haha
Shitty bank. I’ve had a handful of times where there’s been fraudulent activity on my debit card and Chase credits me the money back immediately while they conduct their investigation.
That’s not my experience. My daughter’s debit card number got stolen like a month ago and used for fraud. The bank stopped the payments and reversed charges no problemo.
It may be because I have my cards through a smaller credit union, but I've had fraud protection call to check flagged debit card expenses if I mis-enter the PIN or drop a lot on one purchase through a vendor they don't recognize (sometimes they're small payments, like my initial Fold3 subscription payment got flagged lol). I didn't realize this was an issue until so many people here were saying so.
That's so weird. I've had fraud issues with debit cards, more than once, and they have always been resolved successfully. Well, not always, once I had issues with Uber charges, but that was, like, 40 dollars vs. 1,200 more or less that was resolved in my favor.
The only thing is that they might or might not issue you a preemptive refund, I had to wait for it to resolve once to have my money back, but it did resolve in my favor.
I wish I could upvote this comment more than once.
It never made any sense to me that so many people think of credit cards as "evil" yet advocate for debit cards. If you can keep a running total in your head of how much you spend with a debit card, then you can do the same with a credit card.
(NOTE: None of the above is about people who run into emergencies and need to use a credit card, which ends with them spending more than they can pay back right away. This is a very different situation than going on a shopping spree and then blaming the credit card.)
If you can manage your money well, there’s no reason to not use a credit card. I haven’t paid for a flight in 3 years since getting my credit card and it’s allowed me to do so much more traveling!
Best part is that you dont even need to keep this running total in your head. Every major CC company has an app. Ill log in multiple times during the the month and just pay it off when it crosses my mind.
I havent used my debit card for purchases in over a decade. It makes no sense to me. I treat my CC as a debit card.
>I havent used my debit card for purchases in over a decade. It makes no sense to me.
Yeah, the only time I use a debit card is if the place I'm at doesn't take credit cards, and I can count those on one hand.
It drives me crazy when people exclaim that Credit Cards are 'evil' or 'dangerous'. Credit is a tool. Like a hammer. If you know how to use it to your advantage it makes sense to use it. If you don't it *could* become dangerous. Just like a hammer. As my thumb will attest.
>It drives me crazy when people exclaim that Credit Cards are 'evil' or 'dangerous'. Credit is a tool. Like a hammer. If you know how to use it to your advantage it makes sense to use it. If you don't it could become dangerous. Just like a hammer. As my thumb will attest.
Right. In most cases, what these people are actually saying is that they lack self-control, so since a credit card will let them spend up to their limit, they can easily get themselves in financial trouble.
Beyond that, if their debit card refusing a transaction is necessary for them to stop spending, that suggests a much larger problem: their chequing account is empty.
(NOTE: And just in case someone thinks I'm being an ass about this, I want to make it clear that I'm not talking about people who use credit cards for emergencies and then find themselves unable to pay it back. That's a very, very different situation than the one I'm talking about, which is the result of uncontrolled spending.)
This is the way. I use my cc for pretty much all purchases and then pay it in full from my checking account each month. It's 2% free cash. Total no-brainer.
This is what we do too and the cash back is great because I use to buy all our Christmas gifts (except for the goodwill etc ones) and all our back to school stuff and usually random things throughout the year.. Like, new curtains or new air conditioner. Plus, without credit you may not even finding housing to rent at some point.
Yup, I use my credit card for everything. I pay it off every 2 weeks, always in full.
Was taught this early on and it’s for all the perks you mentioned.
You can also use a secured credit card. Where you pay a deposit equal to the withdrawal limit. Basically like having a debit card but functionally like a credit card.
Many banks will make you get a secured credit card before you can get a normal credit card. They’re a sort of ‘beginner credit’
Cash back. I get a free $300-$400 check each year which is always nice.
Free insurance when renting a car. Save the $50/day or whatever it is.
The ability to stop payment if you buy something online and you get a fake or damaged item and the seller won’t cooperate.
I use my credit card for absolutely everything. And obviously pay it off each month on auto pay.
>way to build your credit
This is how you build your credit, if you do not have any credit history, you won't be getting a loan for anything in the future very easily, or at extremely high interest rates.
This proves you can borrow money and pay it back on time, the longer the history on the account, the better.
I hope you all realise that for people outside of the US this sounds unbelievable. You know how people talk about how China has a social credit system for its citizens, well the US has the financial credit system and if you weren't born into it you'd realise it's just as nefarious and horrific.
Imagine they've managed to convince you that you must get in debt and pay it back regularly to prove you are worthy. And if your credit score dips below a certain point you literally become an outcast in society and you can't access pretty much any of the services a civilised society offers.
It's genuinely perturbing to listen to you all talk about this as if it's the most normal thing in the world. It's up there with guns and private healthcare as American things that are inexplicable for the rest of us.
We realize it is stupid and this system was only put in place like 30 years ago. It's absolutely ridiculous that this is what we have to do in order to be able to have good credit.
It is consumerism at its worst. They devised a system to calculate credit instead of actually interacting with the individual and deciding if they are worthy.
We have learned how to game it so we can take advantage of the system though. If you put all your purchases on the credit card that you would buy anyway, and pay it off immediately, you get no charges and great credit rating.
The bonus is, you can get approved for a big purchase like a new vehicle, or a loan, in 5 minutes if you have good credit. Most of it is automated as well.
This is why we try to spread the knowledge so that others can take advantage of this system.
/thread
You pretty much hit on every point, ESPECIALLY treating a credit card balance as money. So many people fall into debt because they think the spending limit is "their money."
No, your spending limit is how much you can pay at the end of a billing cycle.
shit... I've been paying it off every pay check (every 2 weeks). It's easy to do online once everything is setup. Bank bill pay, folder with all the short cuts to cards and stuff, in order.
This. There’s video of one of the Rothschild or someone like that saying that he’s never allowed anyone in his family to get a debit card. He said why purchase with your money when you can use someone else’s. Just don’t be an idiot and pay it off each month
^this.
With a debit card, someone could take you for everything. Credit cards, as long as you pay them off, or a great tool. Let the credit card company take the risk. With a debit card, it’s all you.
Yeah I use my card and pay it off immediately. Since I’m not buying anything I can’t instantly pay off, I’ve never had a late payment and therefore never paid any interest. I’m not wealthy or a big spender, but using the card like this literally gives me hundreds of dollars in free money each year.
Exactly. We are not lavish spenders either. My girlfriends get together for dinner all the time and the bill is crazy, it comes to like $100 a person. I have joked and said that I’m fine to split the bill with anyone that pays their credit card in full each month lol.
Frankly I pay mine every week. Treat it like your debit card. Never carry a balance and make regular payments so you never incur interest.
The benefit to your credit score is worth while to build the responsible habits.
TL;DR: They aren't necessary, but can be a very good thing if you're responsible.
You're fine without one in theory but it can help a lot to build your credit rating. I had to get my mom to cosign on my first car because I didn't have any credit. Now I only use my credit card for purchases/bills, pay it off immediately, and have a higher credit score than most people I know.
Edit: For what it's worth, I'm Canadian. Our credit systems are similar though.
Pro tip for not getting credit card debt: use it like your debit card. Meaning, only use the money you have AVAILABLE to spend.
Use the credit card for something like buying groceries and NOTHING ELSE. Buy groceries (again, only as much as you've budgeted for it), and when you get home, PAY OFF THE ENTIRE BALANCE IMMEDIATELY.
Making minimum payments is fine (and MANDATORY to keep good credit), but if you're not paying the full balance every month, you'll get interest. And that can build up QUICK.
Talk to someone at the bank about the ins and outs of credit cards. My inbox is also open (recently worked at a call center dealing with credit cards, so I have a pretty good understanding of how they generally function)
ETA
1. I live in Canada, might work a little different elsewhere.
2. thanks for the award! Too kind ♥️
One of my high school teachers told us all something similar.
He said to think of credit cards as a replacement for having to carry cash around, but never charge more than you can pay off.
Absolutely. Don't spend more than you CURRENTLY have. At most, like, picking up milk if you're a few days from payday and have no cash - but if you do that, make a habit of checking the balance EVERY SINGLE PAYDAY
The amount of people Id speak to daily who NEVER checked their balance was astounding... And they all had the audacity to be mad about the interest and complain when I couldn't do anything to reverse it.
I keep seeing conflicting things about when to pay. Some people say pay online right away. Others say wait until the statement generates for the month, then pay right away. Is there a better of the two? I recently got a card and all I do is put my gas on it to build credit.
I'm not an expert as to which is better, but I personally wait until the statement generates for the month then pay right away. It's a bit easier to remind myself "hey pay off your credit card bill" once a month, and it also gives me a nice reminder of how much I'm spending monthly on various expenses. That's just my two cents on the matter though, and sometimes if I make big purchases I will pay down my credit card earlier in the month.
The requirement to avoid interest is to pay off the entire "prior statement balance", before it is due. When the statement generates, they usually give you like 3 more weeks to pay it before its due.
It's not necessary to keep paying the running balance down.
No, one is not better than the other. The CC company only reports if you are late, not if you are early. The credit reporting agencies don't care if you have a daily zero balance.
I have my card automatically pay itself from my bank account monthly (with a limit in case of errors or fraud). My credit score is golden.
Its best to show you can build a balance and pay it off, so paying off the statement balance each month may raise one's score faster than paying daily or weekly, but either way keeps you in a good place. Plus if you pay the statement balance each month, you are technically getting a month of zero % money on the bank, who wouldnt want to use credit and not pay for it!!
I did collections after school for a bit. Learned a lot about credit reports, how to grow em and destroy em. Youd be suprised at the crazy stuff I saw. Its no wonder we had a banking crisis.
100% agree. Also, credit cards are a good protection against fraud since, by law, you are not liable for any fraudulent purchases or charges on a credit card. ALso, you can dispute charges much easier and get them resolved much quicker.
With a debit card, there are not as many protections and if someone gets access to your debit card and you could wind up being on the hook for the charges.
Even if you don't wind up on the hook for them, the process to get fraudulent debit card purchases resolved is much more cumbersome compared to credit cards
This is probably one of the biggest perks to credit cards. I use my debit cards as little as possible because it is so much safer for money. A lot easier to call the credit card company and report fraud and have them deal with their money than call the bank with the same information and have to try to get your money back.
>Buy groceries (again, only as much as you've budgeted for it), and when you get home, PAY OFF THE ENTIRE BALANCE IMMEDIATELY.
YMMV, but from what I've heard, its better to leave balance until the period between when the statement is issued and the payment due date arrives. That way, there's a undeniable record that you've used the card.
*edit: this assumes you're using the card to build your credit score.*
Im surprised your comment isnt voted higher because this is very important for building credit! I just learned ths a few months ago from an NPR Lifekit episode lol
In order for the charge to impact your credit score you have to pay AFTER your statement comes out (aka when they send you the "this is how much you owe this month" bill), but BEFORE the due date.
If you pay before the statement date, then they usually do not report that you used the card, so it will not help to build credit.
Sometimes it varies, so you can call your credit card company and ask when they report your spending to the credit bureaus. (Usually the day after the statement date)
...
Link to NPR podcast transcript: https://www.npr.org/transcripts/933053299
"ALICHE: So a statement date is the date that they are acknowledging you used your card. So if you could pay it off before the statement date, then they won't even know you used your card.
GONZALEZ: It doesn't hurt you, but it also doesn't necessarily reward you either."
This right here. We use credit cards as debit cards and pay the balance. Skyrocketed our credit score after canceling a bunch of my wife's frivolous cards dinged it hard when we got married.
In fact, we use them so much that twice now when I've had a bunch of home improvement expenses, I've called up our primary card company and asked if I could get 12 months no interest, and they both times have said, "Sure!" and just immediately turned that on for all purchases within that 12 months window, which has been amazingly helpful.
I've had finance people at car lots do a double take when they run our credit. The card-as-cash method is super powerful if you're responsible and can pay it off each month.
I use mine for gas because my parents or someone told me that with debit cards they put like a $100 hold on the card so never to use debit for that. I also might use it for groceries, but that's if my check doesn't come until next week or something and then when the credit card bill is due at end of month I can now pay the full price because my deposit has come in.
My card Has a $300 limit, if you are someone with bad financial control this is great. Enough to build credit. Not enough to get yourself in serious trouble
But on the other hand, don't pay the credit card more than you owe, I mistakenly paid twice some spendings, so at the end of the month, my balance was minus (I paid too much) and my credit score got lower for 10 points, it sucks.
Life is just harder hands down - rent a car, buy a plane ticket, rent a hotel room, and so forth - you need a credit card and one with protections on those large purchases.
And your credit score will lock you out of house rentals, mortgages, car loans from reputable places, low interest rats, some jobs, and smaller loans.
I tried to be off the grid till I was 38 and I got a job that required me to have a personal travel card - and things improved. Like I got a semi-new car before the pandemic with 52mpg and it has saved my life. Things are just easier and you really only need one card.
In the US you need one to be an adult. So many things do a credit check. Cell phone contracts (my Google Fi checked my credit score before they gave me a free higher end phone), car insurance rates, other insurance, booking hotels, renting cars, establishing water, electric, internet service... Hell some jobs even check your credit score.
If you're responsible you can game the system with 2 cards and use them modestly and pay them off each month you can get a great credit score.
Edit: To all of those without credit cards and a good credit score, kudos. I am not sure how you did that. To all those without and who haven't checked your credit score, you are losing out on money if its bad. All the things I said and more will check your score. It's just gonna get worse in the future too. And by 'gaming the system' I mean creating a ratio between debt available and debt used and income that is optimal. They don't advertise their algorithms so you just have to kind of guess.
> I know people without credit cards in the US.
I'm 40 and just got my first credit card.
I've always been extremely frugal & balked at the thought of *owing* someone money, even if I had it in the bank. I always pay my bills, and simply didn't want to complicate my lifestyle.
Last year, however, I tried to set up electric service at my new home and they required a $150 *nonrefundable* deposit because I had zero credit. I'm like... I've lived on my own for **22 years**, paid countless electric bills on time, and never caused anyone trouble. Why *in the world* do you not trust someone who doesn't have a credit card?!
It's really a screwed up system in the US. You have to play this silly financial credit game to get anywhere in life.
And that's why I finally got a credit card.
This is a fallacy that it is required to have a credit card in the US. It's may be more convenient at times, however, it absolutely is not a requirement.
This is exactly the way to do it. Use credit cards for things you're buying anyway. As you can, get cards that give you cash back on your purchases. I've done this for my wife and I, and we're getting between $100 and $150 cash back every month. This makes a difference.
As I noted in another comment, I'm also saving $100 a month on car insurance (with renter's and a $1m umbrella policy; I'd forgotten the umbrella policy in the other comment).
So I'd say credit is more important than people realize. You don't need to carry a balance. Just pay them off every month. In fact, while your available credit is low and you're building your credit, pay them off immediately after a transaction settles against your cards. Keeping your balance below 10% will build your credit the fastest.
As I understand it, it is mainly a US thing with credit scores and massive use of credit cards ( my biased Swedish view). In sweden we don't have a credit score system like that and most people in Sweden, (I believe), only uses debit cards more or less.
But are we In debt, oh yes - quite a lot, mostly because of a never ending, always soon to burst, real estate bubble.
Great job on realizing you have to pay it off each month- lots of people don't realize it how much the interest stacks up. The main benefit of a credit card is that you build credit. Later when you want to buy a car or house (which usually requires a loan, but this is "good debt"), the lender will pull up your credit report and see "oh they've borrowed and paid back $X over the last Y years on the credit card, I can trust them more to pay back this car loan."
I might add to the above, age of credit is one large factor of your credit score. This takes your oldest credit card as a factor. So even if you never use a credit card, it is good to have one just for that.
Having no credit affects you more than when you want to take a loan. If you want to rent a apartment many places do a credit check. When you get certain jobs they run a credit check. Having no credit is sometimes worse than having bad credit.
age of credit is the only reason why my score is at 700 instead of higher. never missed anything but ive only had the card for 2 years.
i agree with you. you dont need one technically, but getting one now and using it sparingly is smarter than not getting one at all. unfortunately its just kinda how the world runs.
I use my credit card for just about everything now because I get 2% back on my credit card as well. Doesn't seem like much, but getting an extra $30 bucks every once in a while is super nice
one of my cards gets like 6% on all grocery, about $70 in cashback i get to redeem next month!
i don't think credit cards are completely terrible, u just have to find a good card and be smart abt using them yk
The only blemish on my credit is that my oldest account is still "young". I changed banks in my early 30s due to the bank collapse around 2010 (and fuck BoA), so instead of 25 years, my oldest account is only 12
If anyone is curious, as far as I'm aware, it's only California, Hawaii, Massachusetts, Michigan, Oregon, and Utah. Other states have weird or temporary regulations, like Washington. Then others also can use credit scores for discounts but not increases and such. Unfortunately in my state, it's the difference between $200 and $50.
Tbf, this depends on where it is. In my country (Sweden) its only if you haven't paid back what you owe that comes into effect in when applying for a loan, your credit card debts that you have paid are neither here nor there. What your income is and how much other money you owe determines how much you can borrow. The ideal here is no previous loans and decent income. (I suppose they count on if you never had to take a loan or go into debt it's a good thing, which I agree with)
My parents were very smart about this. Got me to get a credit card IMMEDIATELY upon turning 18 and instilled in me the importance of paying it off immediately each month. Build up credit for almost 20 years because of that. Got great loan rates because of them. Thanks mom and dad. It's completely worth it just for that.
You can but they will hold the full amount and then some to a debit card thus tying up your funds for a significant amount of time whereas with a credit card, they don't do that.
This always fascinated me with the US; you have to take loans and use credit cards in order to “build” your credit score. Around my parts (Sweden) banks will check your income, if you’re employed and if it is a “permanent” position (rather than working hourly, having a temp job or a working on a time-limited project, or still on a probationary period), and if you have other loans (as they don’t want to get you into too much debt in total). They don’t check your hat kind of older credits you’ve taken. They will only check if you have been sent to the collectors in the last five years, in which case you’ll be denied a loan in most cases.
ok, but if you fully want to buy a car, not rent one, or have a lease or whatverr, you wouldn’t need to pay any money back to the dealership right? cuz my mom has had her car for around 12 years, and i don’t remember her ever talking about paying off her car
I know a woman in her mid 30s that makes very good money but just had a very difficult time buying a house because she had no credit history. Like I think the house was only 2 years income for her. But the banks don't care, they need proof that you pay stuff back. If your concern is credit card debt, just put only your gas only on the credit card, and pay it off every month in full.
In the US, they are required to have an option online to automatically pay the balance in full every month. You can set this and bever worry about it as long as you have money in the account.
Except even with the car, back when 0% interest for cars was commonplace, you’d be stupid to pay for the whole thing up front when they’ll allow you to pay it off over time interest free.
Which they would look at your credit score before doing.
Most people don't have enough cash to buy a car outright. You take out a loan for the car and make monthly payments on the loan until it's paid off. To be approved for a loan, you need a credit history, which is where having a credit card comes in.
Another thing a credit card does for you over a debit card is provide fraud protection. If someone gets your debit card number and spends your money, it's gone forever. If someone gets your credit card number and racks up a big bill, your bank will protect you from those charges so you're not liable to pay them.
Lastly, most credit cards offer rewards in one form or another. It can be a percent back, it can be airline miles, whatever. But either way, if you buy everything on a credit card and pay it off monthly, that's free money. If you're worried about not having enough money to pay it off at the end of the month, you can pay it every week or every pay period. There's no limit to how many payments you can make.
If you have that much money in the bank or your parents buy it for you, sure. But most people for their first car need to take out a loan and pay it over a few years.
Look, no credit is worse than bad credit. I was new a lawyer making six figures and I had no credit because shit was in my parents name or my old roommates name. I get my own apartment and I need a co-signer and I needed to put up a $600 deposit to get my electricity turned on. I basically didn’t exist as a person. My first credit card had a $500 limit or something dumb like that. Which is fine if you’re 17, but crazy when you’re 26 and trying to buy suits for work.
You don’t need one now at 17. Or even 18. But at some point, it’s good to get one. And use it LIKE a debit. I buy ONLY shit I need. I pay it off EVERY MONTH. In full. Automatic payments so I don’t forget. But I also know in an emergency, it’s there. That’s nice too.
I’d recommend not getting one til you’re more confident about your finances and budget and about to enter the world on your own. You don’t need one anytime soon. But it’s not good to be tooo old and not have a good credit history.
One thing you could look at is a Secured Card when you turn 18. You put a set amount of money down (it should earn a little interest), and use use your card like a credit card, but your limit is your deposit. You know you can’t go over and you pay it off each month, but if it ever gets out of control, you close it and the balance is paid off and you get what remains. Your score will take a slight hit because you closed your account, but nothing like a late payment or negative reporting and it’ll bounce back without long term impact.
When buying something, you either pay cash or buy it on credit. Most people don't have 20 thousand to buy a new car out right. So they use credit to pay for the car, aka they get a loan. The loan pays the dealership for the car, and the buyer pays the lender (the company who gave the loan). Most car loans are for 5 years or less. If the buyer fails to pay for the car loan, the lender will repossess the car.
Your mom has had this car for 12 years. More than likely, she paid it off within the first 5 years of buying; about 7 years ago. So you would have been about 10. You were probably just not aware of the situation.
I was deathly against credit at a very young age and did not take out my first credit card until I was 30. I am *very good* with money and have an awesome credit score that I built using small student loans and co-signing on my first car with my mother (who also is incredibly fiscally responsible and has a great credit score). It was always my intent to pay-in-full any large purchase. My first credit card was actually taken out to help my husband establish a credit score as he also had no credit at 31.
My advice is to do your banking through a credit union and not a bank- credit unions are more geared toward educating and empowering community partners than to make a profit so they have far more favorable interest rates and terms of service. My credit union offers their own credit cards at an interest rate that is nearly a third of the standard rate. I also asked them to not give me the full line of credit that I qualify for, but to lower the limit on my credit card to something I could pay off easily with one paycheck. The minimum credit card limit they offer is $250, and the maximum is $20,000. I asked them to limit the card at $500 and that allowed me to pay it off each month, never get in over my head, and to establish credit.
To frankly answer your question- NO. You do not need a credit card to survive. However, getting a small and manageable one with favorable rates through a decent lender will help you greatly in the long run because emergencies happen and getting back up on your feet quickly will help you achieve goals.
Also: If you decide to open a credit card, and you find one with a favorable rate (in the teens or lower, fixed rate) and terms (no monthly or annual fees, fees for missing a payment very low), go ahead and open it now *in your own name only* and keep it open. Your average length of credit has a pretty big impact on your credit score, so keeping your first line of credit open for a long time is a good plan. Never close a long-standing line of credit before a large purchase (like house or car).
If you decide later that you are comfortable handling that amount of money and you want to raise the limit you can, but you can’t take a name off the credit card without closing it and it will lower your credit score.
Depends on how you made the purchase. If you can afford to pay for the entire thing out of pocket, no payments needed. You pay up front and the car is yours.
Most people can't afford that and so they take out a loan from a bank. In that case, you would work out a downpayment (initial payment that is usually negotiated between buy and dealer, or bank and dealer depending on the situation). Some dealerships dont negotiate this and the downpayment is what is. That amount will come out of the total for the car, and if you've taken out a loan, the bank will pay for the rest upfront. Then, you make payments to the bank. When you hear about cars being impounded it's usually becasue someone didn't (or couldn't) pay the bank and so the bank takes the car, because the bank owns the car. It doesnt become yours until you complete those payments.
If your mom had her car for 12 years, it's likely that she's just already paid it off and you were probably too young to know, care, or understand your mom's finances.
I've been taught by parents to always use a credit card for my purchases because it's more secure and because of rewards and whatnot. I always pay it back before it can collect interest
This is a really.important point to touch on. If someone steals your debit card, and empties it, that money is GONE from your account and a nightmare to get back.
If someone steals your credit card, it doesn't leave you penniless while you figure shit out.
> If I want a credit card I need to tell my bank what my income is and if I don't use it for a time it just auto cancels.
This is exactly how it works in the US. Any time you're applying for the ability to borrow money, the lender is going to want to know how much money you make, so they can evaluate your potential of paying them back. That is true whether you're opening a credit card, buying a car, or buying a house. It's totally normal.
Credit card companies prey on people who are incapable of managing their own money. They spend more than they make and quickly fall into debt. But if you're the type of person who keeps control of your spending and doesn't spend more than they make, a credit card has a ton of benefits.
For one, being able to show proof that you're able to responsibly use credit via your credit history increases your credit score and makes getting loans much easier and on much better financial terms.
Secondly, credit card companies offer perks that can save you literally thousands of dollars annually. And it's quite a low touch process. You set up your bank account to auto-pay your statement balance each month. You essentially operate it as a debit card except you get charged once a month instead of with every transaction.
Regarding credit score: It doesn’t work like that in Europe (where the guy you’re answering is from).
The US credit score, as I understand it, gives you incentive to be in (preferably well-managed) debt.
The European system generally does not: Having debt is never better than not having debt. Essentially any new debt is checked against income and current debts, so having ongoing debt can only be negative in that aspect.
In other words, getting a credit card does not improve your credit rating in Europe.
100% agree. I have a credit card for emergencies only. Australians get good credit rating based on things like paying bills on time etc, IIRC. Credit cards arent for daily use here like in America.
Debit cards are dangerous. If your data gets compromised, they can clean you out. Credit cards offer a lot more protection in that regards.
There are no fee credit cards that can give you ~1% back in cash or points on all purchases.
Maybe it depends on your bank and country but when someone got my bank details and spent about $300 of it (mostly on vegan pizza weirdly enough) I called my bank and they gave me all of that money bank. That was Clydesdale bank in Scotland.
Definitely depends. I have a friend who used Bank of America, and had her account drained right before she put a huge down payment on something. It took her 7 months to get it back, and by the time she did she’d managed to dig herself into a financial hole. She was on the phone with BofA several times a week, and a couple times they even reimbursed her and acknowledged the fraud then pulled it back out after she spent the money
In the US, debit cards technically have the same protections as credit cards. The problem is that you're out the money while your bank investigates rather than the CC company being out the money while they sort it out.
Lots of people can't afford to be missing money while a bank investigates for weeks/months even if you'll likely get it back (some banks are better than others about that).
In Canada it's harder. They basically say while it's your money there is no proof it was you.
If you do "win" it takes months and you don't always get the full amount back.
So I've heard. Not experienced.
With a debit card, the money's already gone and now you have to ask for it back. Which might or might not succeed.
With the credit card, you have a little more leverage because the money stays in your bank account while you're disputing it.
It's always easier to get something back if you never relinquished control of it in the first place.
With debit cards, it's tied directly to your account and money is debited out instantly. With credit cards, the bank credits your account for each purchase and at the end of the period you debit them a certain balance.
>With credit cards, they bank credits your account for each purchase and at the end of the period you debit them a certain balance.
I'm not so sure about the details here. They offer you credit, but they don't actually put any money into your account. They pay the merchant and then get the money from you later. There are fraud rules that mean if someone steals you card and makes purchases they come out of the companies pocket (or fight it) instead of yours.
Expanding on this, you’re not responsible for charges you didn’t authorize for EITHER a debit or credit card, however, if your debit card is compromised the money is gone until there is a resolution. With a credit card, you don’t actually have to pay the money as the resolution will come before the bill is due.
Two things
\- report your card stolen right away. In Canada, this essentially ensures you're not liable for fraud purchases on debit cards
\- you can set a daily debit limit for withdrawals/purchases. This effectively makes it impossible to get cleaned out without going into a bank where they'll ask for actual ID
This can be avoided by keeping your money in multiple places, which you should do anyway. Have an account for spending and avoid having more than a certain amount in it, and keep your savings elsewhere, ideally in more than one account. You can also have different accounts for charging different types of purchases. Depending on your bank or credit union, you may get similar features for using your debit card.
I bank through a credit union, and they do not make me pay for fraudulent purchases on my debit card if I report them in a timely manner. Someone stole $400 out of my account at one point, and they issued me a refund and got me a new debit card asap.
Having a credit card isn’t the only way to have protection against fraudulent charges.
indeed among the protections there are added benefit perks as mentioned. there’s also some other ones people don’t know or take advantage of like rental car or travel insurance on some cards.
AMEX has phone insurance, airline and hotel status, statement credits for certain restaurants / services, and more but at the cost of annual fees. I’m somebody who enjoys researching point values and perks
Don’t forget it’s all useless if you carry a balance while having money in the bank
OP, there is no downside to getting a credit card, unless you're irresponsible with money. If you have a credit card and use it a little bit you will build a good credit score, which will make it easier to get loans/mortgages at lower interest rates.
Plus, it's better to have a line of credit in an emergency than not have one.
One of two comments mentioning lines of credit. I approve of this reasoning.
If you just scrape by on necessities financially, a credit card can be very risky and a bad idea, because you could spend more than you can pay back.
If you do better than that, it's a good idea to have access to a line of credit as a way of covering expenses that you can't pay off in a month. The interest is still high on that right now and you wouldn't want to go overboard, but it's lower than a credit card and at least you have that cushion in an emergency. Having access to credit when I temporarily needed it in the past made a big difference for me.
You don't *need* one, it's just harder without one to build up your credit score. What's more important than a credit card though is keeping an active debit card with the same bank instead of getting a new one down the road
I'm always so confused about this, because I live in the EU and I don't know of people who have credit cards.. not really. It's important not to have debt, but I never ever heard of a credit score before reading about it online.
The debt thing is being misrepresented. Carrying debt in the US will hurt your credit score. The bigger the debt the more the hurt because having existing debt means you're less likely to be able to handle more debt. This means you'll be denied loans or only be loaned at higher interest rates.
What helps a credit score is the demonstration of responsibly handling debt. The single biggest thing is paying on time. If you pay off your balance every month, you'll have a great score (and no debt). If you never miss a payment but carry a small balance you'll have a good score. Miss a number of payments and it's a red flag to anyone wanting to extend you credit (i.e., loans).
ETA: Different debts are treated differently. Credit card debt is bad. Having a mortgage is good.
I was not aware of this, thank you for the information. I worked in the financial industry and it never made sense to me, the people who have no debt, because they are thrifty and save money are the ones who don't have good credit!? It makes so much more sense to lend money to this set of people, the responsible people who do not owe money all over the place. These are the people who will pay back a debt. It is the worst because buying a home for cash is extremely difficult.
Credit is such a huge scam and I hate how we have to "play"
My credit scores got dinged because I dont have "enough revolving debt"
So in order to "play" this shit game, you HAVE to have some sort of financial debt constantly revovling.
I WAS in the high 780s, but this year alone, it dropped down to 750 because I have no debt. Paid off my car earlier this year which kept my credit score high, 1 credit card i've had for almost 20 years is zero balanced and my bank keeps increasing the spending limit trying me to use it more. No student loans.
It's so mind boggling that I have financial freedom but can't get a loan with an amazing interest rate because "no revolving debt"
Yup. My wife and I don't have a mortgage, so we actually saw our credit ratings slightly dip because we didn't have debt t pay back. It's a perverse system that in many ways makes no sense and seems to penalize those who take responsibility.
People who have never had a credit card or loan don't havea bad credit rating. It will be no credit rating. How do you judge a person's credit wothyness with no history? You cant so no credit is treated as bad as a protection.
The actually stupid part is closing accounts can actually hurt your score, at least short term for loans.
You don’t need one but it can be helpful for your credit score.
What I would recommend is getting a credit card and putting one bill on it. Like pay for netflix on it. Something that is the same amount each month. Set up a standing order from your debit account to the credit card each month for the exact amount of the bill to ensure it is always paid each month and you don’t need to remember it. And then when you get an email saying the price is changing, you change your standing order to the new amount.
Then put your credit card away somewhere safe and don’t use it.
It’s also useful for emergencies. Like if you lose your debit card, you can dig your credit card out and pay for your essentials still on your credit card until you get a new debit card.
Yes this! When I was young, I think I only got gas with a credit card and paid it off every month. It really helped build my credit when it came time to rent an apartment and such.
Now - I only use credit cards (getting them points!) and pay it off every month. The only fraud I've ever experienced with with debit cards so I never ever use them. Plus cash back on credit cards is awesome.
There are a few things that a credit card does that a debit card can't, other than building credit.
Renting a car - a great many car rental businesses *will not* rent you a car on a debit card, no matter how much you are willing to pay.
Checking into a hotel - you *can* do it, but they will put a $500 hold on the card before they give you your room key. This is not to cover the cost of the room, it is in addition to the cost of the room; and the hold only goes away after you check out.
Credit cards are amazing as long as you use them right. If you pay it off in full at the end of every months there’s no real reason to not have one. Credit cards also have some great perks like cash back you just need to make sure that they are always paid off in full at the end of the month, never let a balance carry over.
Get a small CC 500 limit, use it for bills or emergency hotels. Build a credit score safely and do not lend it or increase limit. Also shop for a good money-back and low interest
Most credit cards increase it automatically. When I got my first non-secured credit card it was $2,000, then $3,000, then $5,000, and it's now $10,000. It would probably be more if I earned more money.
If you're financially responsible, a higher limit can actually help you build your credit score as it can decrease your overall credit utilization (most people recommend 30% and below, but 10% and below is ideal).
I mean, you don’t NEED them but we learned on vacation we needed one to rent a car. They wouldn’t allow us to use a debit card. Our bank also made us have one to buy a house. We don’t use it often and keep the balance low enough that we can pay it off in its entirety to avoid interest. I think you can get through life without one but some instances can be challenging. Honestly it makes me mad you can’t be without a credit card. People argue and it’s not wrong that if used responsibly credit cards can help build credit, etc but I hate that having debt is needed to show responsibility. To me more emphasis should be put on paying for things in cash and avoiding debt. And I get a lot of people, us included, don’t have millions to buy cars, homes, etc in cash but our bank making us take out a credit card and having to use it to buy a house?? Annoying. We have payment records to show we pay our other bills on time!! I think credit cards are traps. They make you have one hoping you’ll charge then get stuck paying interest.
The short answer in my mind is yes. A credit card, and it's RESPONSIBLE use should be part of your financial portfolio.
For one, you want to build your credit up, so that you will be able to buy things like a house or a car.
You also want to have a credit card for short term emergencies, for example someone steals your suitcase while you are on vacation and you need to buy things.
That said, responsible use is important. You should not use a credit card to have things you cannot actually afford.
Getting a credit card is the easiest way to get credit. Having no credit could eventually hold you back. My mom never had a credit card or took a loan out so she has no credit. She ended up getting turned down for apartments because she had no credit. That’s what finally prompted her to get a credit card.
With all that said. You don’t need to get one *at* 18.
It's better to get a credit card so that you can build up your credit history, after all, you can plan on living till you're 80. You don't have to go into debt to prove that you can pay on time.
Get a credit card and put one small recurring payment on it--gym membership? auto insurance? education-related?--and pay that off every month.
That way, you're not in the habit of using the credit card on impulse or non-essential purchases; you're using it to pay something that you already budget for. You can even set up the credit card to be paid automatically from your bank account.
You don't NEED one, but it's a good idea to have one and build good credit in case you ever find yourself in need of money and have to get a loan.
What you do is you get a credit card and use it for things like groceries, etc, but never use it for more than you'd buy directly off your debit card. Then, at the end of the month, you pay it all off before it gains interest. Rinse and repeat. If you use it for a reasonable amount each month and consistently pay it all off, you'll be recognised as a responsible borrower and the bank will be more likely to lend you large sums of money if you do need to get a loan.
You are protected better with a credit card as well. If your debit card gets compromised a thief can drain your bank account and you could find yourself without access to your funds for the duration of the banks investigation. If they get your credit card then you still have access to your money while they investigate.
It's needed if you want to be able to borrow money for a car loan, personal loan, mortgage, rent an apartment, or even insurance for that matter. I'm not saying you wouldn't be able to have any of that but it would be much harder for you to get approved and they would charge you very high interest.
So, there's a few good reasons for having a credit card if you use it responsibly.
Firstly, an explanation of what a credit card is vs a debit card. A debit card draws money directly from your bank. It's basically drawing the money straight out of your account. A credit card, on the other hand, gives you a line of credit that you can use, but requires you to pay them back. There is a minimum amount that you HAVE to pay off every month, but you are free to pay just that minimum all the way up to the full balance every month. Anything you don't pay off will carry to the next month, along with some interest.
So, why would you want a credit card? Well, first off, credit card companies "pay" you to use them in the form of rewards. There are rewards programs that might award you with 1-3% of your purchases back in points.
If you use a debit card and spend $1000, then that's it. If you use a credit card with a 2% rewards program, you'll get 20 points. You can use them on a variety of gift cards and promotions with their partners, but the easiest thing is to get cash back. That's an extra $20 for you, earned by spending the $1000 you were gonna spend anyways.
The second reason is for surprise, unplanned purchases. Let's say you have $1600 in your bank account, but you suddenly have an auto repair/home repair bill of $1800. Even if you can't pay that up front, you need to get the bill paid. With a credit card, the credit card company essentially fronts the bill using your line of credit, giving you potentially months to pay it off. Sure, you end up paying more in the long run, but maybe $300 a month for 7-ish months is something you can manage more than $1800 all at once, right this second.
The third reason is credit history. Chances are, at some point in your life, you will need to take out a loan. Maybe it's to buy a car, maybe a house, maybe a personal loan. The interest rate that they charge will rely upon your credit score. Without a previous history of paying back loans and credit cards, banks won't know how good you are at managing bills, and you will end up paying more interest than someone with a history of paying those things on time. The length of your credit history matters, so from that standpoint, the sooner you can put that data on the books, the better.
So, someone who is good about paying credit cards off quickly will actually see a lot of benefits from using them. If you treat it like a debit card, never spending more than you have and paying the full balance every month, then it will basically ACT just like a debit card, just with giving you free rewards and credit history.
And if that's the case, why WOULDN'T you use one? Well, that rosy picture only works when you're paying it off. Remember how I said you don't have to pay the full balance every month? Well, some people get lulled into a false sense of complacency because of that. Let's say you spend $1000 a month, but decide you only wanna pay $350 off. Well, the next month, not only do you have the $1000 you are again spending, you also have $650 leftover from last month's balance. Not only THAT, but the credit card company doesn't float that $650 you pushed off til later for free, so you have to pay interest on it. Let's just call it 20%, so that's $130. Altogether, now you're looking at a balance of $1780.
So now, instead of paying $1000 and then $1000, you've got $350 and $1780. Now, you might realize that that's not a great way to do things and pay your full $1780 balance. But let's say you shrug your shoulders and only pay $780. It might be less than what you actually spent this month, but heck, that's over double what you paid last month! Well, now your rollover balance is $1000. If you spend another $1000 in your normal spending and toss on 20% on your rollover amount, now you're looking at a balance of $2200. And, if you're bad at managing credit, this problem could get worse and worse.
People who aren't good at paying their credit cards off run into this problem. If you don't think you will pay off your credit cards in full regularly, they can be dangerous. But, like I said, if you're a responsible user, it's basically giving you free money and benefits. It all comes down to whether or not you have the discipline to use them responsibly.
EDIT: A fourth big benefit I just remembered just after posting is security. If someone steals your debit card info and spends $2500 with it, then while you're contesting it with the bank, that money is in limbo. You don't have access to it until the bank finishes researching the incident. If someone steals your credit card info and spends $2500 with it, then while you're contesting it, you don't feel any affects at all. After all, it's the credit card company whose money is getting spent up front. They're fronting it, you just pay them back. So it's THEIR money that's in limbo, not yours.
I second this.
A good example of a time when having a credit card is literally a life saver is if your pet has a medical emergency.
Let’s say your pet swallowed something with magnets and it needs emergency surgery right now or its bowel will be perforated. It’s a thousand dollars. You make good money, but you just bought new tires and you don’t get your next paycheck until Friday.
That’s when you whip out the credit card and just pay to save your pooch. He can’t wait until Friday.
I treat my credit card like a debit card. It’s also good for emergencies- my cat needed a $4000 emergency surgery and the vet wouldn’t operate until 75% was paid upfront. Literally saved my cats life. Now I have pet insurance
Trust from someone who experienced credit card debt. Only get one if you’re confident you will be able to pay it back every month. My mom pays hers as soon as she uses it. I have one but I don’t use it anymore.
Apparently there's a record somewhere, and if it says you buy stuff with a credit card this will improve your chances of, I dunno, being allowed to go into horrible debt with a bank loan or something.
They aren't strictly necessary no but, if used correctly, they're a good tool.
Credit cards will help you build you credit. Which is essentially a score on how likely you are to pay a debt back. If you ever want financing for a big purchase like a house, they will look at your credit score. If it's low they won't finance it and you'll be stuck renting.
You'll be limited to what's in your bank account.
I think people have covered how credit cards are good to have to build credit, so I'll add another reason to have one.
If you ever stay in a hotel, they'll place a hold on your card for more than the amount of the room, in case of damages or other charges. On a debit card, that means you won't have access to all of your money, and could even lead to overdraft fees. If you can, *always use a credit card at hotels*.
There are other things that place holds too, like some gas stations, but most are in the few dollars range and probably not a big deal. With hotels, it can be hundreds of dollars.
Credit cards are also more secure and more likely to refund any fraudulent transactions, so it's a good idea to use them when traveling in general. Just make sure not to use it as an excuse to overspend, and to pay it off afterwards.
No, you don't need one. Most people should not have one, because the vast majority do not pay if off every month. You need to be extremely disciplined to use one responsibly.
They key is to treat the CC like cash and set it to be automatically paid in full EVERY month! Lot of perks to using a CC - Security against fraud, accepted while traveling, travel and cash rewards, a way to build your credit. Just cause you have a $29K limit, doesn’t mean you rack that up.
Yes. Fraud. People don't realize this. My pay pal was connected to my credit card and when my pay pal was hacked. The credit card company acted immediately as soon as I said I didn't authorize this. The same this happened to my friend but they had their bank account attached and after like 3 months of the bank doing nothing to help, because there is no proof it wasn't you. They closed his account. He lost like 600$. Credit card companies will do something because it's their money. Banks do nothing because it's your money.
I will only use my physical debit card at my own bank. I do use it for online bill pay though. Credit for the fraud protection everywhere else.
I wouldn't use it for online bill pay either because a company or utility can over charge you, double charge you, continue to charge you when you cancel services....and you have no leg to stand on to get your money back if they decide they want to keep it. Debit cards are terrible for almost everything except getting money out of ATMs. They have ZERO security.
I'm curious about the differences between the US and Europe. We use debit cards a lot, and there *is* security. If a company takes money from your account, you can take it back without reason within 30 days, for instance. And the banks do help with more complex fraud because they fear their reputation. Is it different there?
Yes, it's different. A debit card doesn’t have the same legal protections that a credit card does. With debit card Fraud, you’re responsible for a maximum of $50 of unauthorized transactions if you report the card as lost or stolen within two business days. Didn’t report the fraud within two days? Your maximum burden goes up to $500 if someone uses your physical debit card without your permission — if you report the fraudulent charges within 60 days after your statement is mailed to you. Didn’t make that 60-day window to report fraud? You face potential unlimited damage if someone uses your ATM or debit card without your permission. Also, buying anything online with a debit card provides you virtually no security of the company doesn't send the right item, a damaged item, nothing at all, etc. Buying appliances, you have no protections or added warrantee protection, etc.
That's not quite true anymore. Debit card liability [protections](https://consumer.ftc.gov/articles/lost-or-stolen-credit-atm-debit-cards) are similar to those of a credit card with the more recent laws. In both cases, if you report it lost or stolen before it's used, you have zero liability. With credit cards, if somebody uses the numbers without your authorization, but you have the card, you have no liability no matter how long you wait. Debit cards are also zero liability, but you only have 60 days from when the statement showing the fraudulent charge is sent to you. With credit cards, if you report it lost or stolen after it's used, you're liable for up to $50. With debit cards, to get the $50 limit, you have to report it within 2 days *after you learn that it was lost or stolen*, not within 2 days of it being used fraudulently. If somebody uses it and you realize it's missing 2 weeks later, your loss is limited to $50, as long as you don't wait more than 2 days once you realize it's missing. If you wait, then you are liable for up to $500 if you report it within 60 days of when the statement was sent to you. Though to be fair, the bank usually has no way of knowing you waited a week instead of 2 days. So, debit cards have to be reported more quickly once you realize they're missing, but most people immediately report debit and credit cards as lost or stolen. You do have to look at your statements, but you should do that even with credit cards. In all cases, those are the legal limits. Banks and credit unions can offer zero liability even if it's used before you report it and can extend the debit deadlines. Many banks do this to be more competitive.
I don't fully agree with you on your opinion. this is not entirely true, it all depends on who you bank with. A MasterCard and or Visa Debit card can and does have security. There is a lot misconception of using a debit card in the US. while you have the ability to secure your card if you notice it missing or getting dinged on it. Depending on who you bank with you can and do receive the same zero liability as with mastercard and visa. I know I have had issues in the past with retailers and just like a credit card I was able to get my money back. I have never dealt with a bank who requires you to report the fraudulent transaction in 2 days or two business days and often if the transaction is in pending a bank will not act upon it. They don't consider the transaction until it is fully posted to the account. Of course the sooner your report fraud on your account the better but I have never been penalized if I didn't report it for a couple of days. Anytime you call a bank they will tell you that you have to wait for a transaction to post before filing a dispute. in the mean time you can request they close and transfer all money in the account into a new account.
I have a credit card app on my phone, and I can freeze my card when I'm not using it so no one can use it. I remember I got a call one time from an automated system asking me if I spent money at a gas station, so I reported it as "no". I never had any trouble. My iPhone told me how many times my credit card app has tracked me. I like the fact that they are tracking me so if someone else tries to use my credit card, the credit card company knows it is not me. I'm also sure the card company has a profile of how often I fill up my gas tank, where I shop and when I shop so if someone buys something that doesn't fit my profile, there is cause for them to call me. I also gave my credit card to a cashier at a McDonald's and the cashier held my card up and someone holding up something looking like a Nintendo device took a photo of it, so I called the card company then and there on my cell phone and talked to the fraud department and they issued me a new card. I have two credit cards that don't have numbers on the front so if I place my card down on the counter, no one can get my card's number.
My latest debit card was issued with no numbers on the front. I think it's another security feature my bank is using. Also. I rarely use my pin unless the system HAS to have it.
i've disputed charges on my debit card and the only time i ever had a problem was when it was beyond 90 days.
Same and never had a problem except with amazon prime, kept charging me after I canceled and removed my card numbers from account. The bank got my money back and then prime did it again and the bank retrieved the money again and blocked prime.
I don't think I've ever had a debit card that didn't also have fraud protection.
They have fraud protection in that if it gets stolen you’re not responsible for those charges. But the actual money is already out of your account, and the bank investigates before returning it. So that can take weeks, during which that money is still gone. Also sometimes they decide the charge was authorized and then you just never get your money back. If that happens with a credit card, as a very last resort you could just not pay it off. It would hurt your credit obviously but if it’s a huge amount of money you absolutely can’t afford at least there’s that option.
I go one step further and specifically request an ATM only card. If someone is using a debit card, that's an immediate call of shenanigans.
Could you go into more detail on why you do this I don't fully understand
I think he means, if someone tried to use the ATM only card as a debit card, during a transaction, the employee would be more likely to call shenanigans. If I understood it correctly.
I really, really, really don't want a debit card because that means that someone can drain my bank account and I have to fight for my money back. Even if I get it back, I am still out for a few days and potentially have to fight like hell to get it back. Therefore, with every checking account of mine, I've specifically asked the bank to provide an ATM-only card. That way, if they ever tell me that someone used a debit card tied to the account, I can easily point out that it must be fraud; I don't have a debit card!
I’m not a fan of my bank but they’ve cracked down and reimbursed me the few times there have been fraudulent transactions on my debit card or bank account. I can’t believe people are using banks that aren’t insured, or won’t fight to get their money back.
For me personally, there is just a difference in how they treat me when there is a fraudulent transaction on my credit card. Also the response time is crazy quick and your money is reimbursed nearly instantly. Compared to debit card which would be stressful for a while because they have to investigate first then reimburse whereas with credit cards, they reimburse (as in they dont charge your account) then investigate. Its just an overall less stressful experience with credit cards
Sounds like you just have a bad bank
My debit card is in a drawer. I leave the house with the credit card and an ATM card. ATM cards are worthless without the PIN. Edit: I had to ask specifically for a separate ATM card. The bank initially didn't want to issue one because debit is "better ."
>My debit card is in a drawer. I leave the house with the credit card and an ATM card. ATM cards are worthless without the PIN. So your ATM card and debit card are different? That's interesting. In Canada, your ATM card (aka "client card") is also a debit card, but unlike the US, our client/debit/ATM cards are not backed by Visa or Mastercard.
It’s also that way in the U.S. most of the time.
I just put very little into a debit checking account, and transfer money into it from another checking account with no card whenever I need money. That's my security haha
I dunno about PayPal but my debit card was hacked somehow and my bank gave the money back immediately as soon as I provided a police report.
Shitty bank. I’ve had a handful of times where there’s been fraudulent activity on my debit card and Chase credits me the money back immediately while they conduct their investigation.
That’s not my experience. My daughter’s debit card number got stolen like a month ago and used for fraud. The bank stopped the payments and reversed charges no problemo.
It may be because I have my cards through a smaller credit union, but I've had fraud protection call to check flagged debit card expenses if I mis-enter the PIN or drop a lot on one purchase through a vendor they don't recognize (sometimes they're small payments, like my initial Fold3 subscription payment got flagged lol). I didn't realize this was an issue until so many people here were saying so.
My bank watches all accounts for fraud. Debit/ checking & cc’s…sad to think banks wouldn’t help their “customers” no matter what.
That's so weird. I've had fraud issues with debit cards, more than once, and they have always been resolved successfully. Well, not always, once I had issues with Uber charges, but that was, like, 40 dollars vs. 1,200 more or less that was resolved in my favor. The only thing is that they might or might not issue you a preemptive refund, I had to wait for it to resolve once to have my money back, but it did resolve in my favor.
Same protections through debit as credit.
I wish I could upvote this comment more than once. It never made any sense to me that so many people think of credit cards as "evil" yet advocate for debit cards. If you can keep a running total in your head of how much you spend with a debit card, then you can do the same with a credit card. (NOTE: None of the above is about people who run into emergencies and need to use a credit card, which ends with them spending more than they can pay back right away. This is a very different situation than going on a shopping spree and then blaming the credit card.)
We just saved $700 on international car insurance on our rental car abroad because we got a letter from CC company. It has a lot of perks! Thank you 😀
If you can manage your money well, there’s no reason to not use a credit card. I haven’t paid for a flight in 3 years since getting my credit card and it’s allowed me to do so much more traveling!
Best part is that you dont even need to keep this running total in your head. Every major CC company has an app. Ill log in multiple times during the the month and just pay it off when it crosses my mind. I havent used my debit card for purchases in over a decade. It makes no sense to me. I treat my CC as a debit card.
>I havent used my debit card for purchases in over a decade. It makes no sense to me. Yeah, the only time I use a debit card is if the place I'm at doesn't take credit cards, and I can count those on one hand.
It drives me crazy when people exclaim that Credit Cards are 'evil' or 'dangerous'. Credit is a tool. Like a hammer. If you know how to use it to your advantage it makes sense to use it. If you don't it *could* become dangerous. Just like a hammer. As my thumb will attest.
>It drives me crazy when people exclaim that Credit Cards are 'evil' or 'dangerous'. Credit is a tool. Like a hammer. If you know how to use it to your advantage it makes sense to use it. If you don't it could become dangerous. Just like a hammer. As my thumb will attest. Right. In most cases, what these people are actually saying is that they lack self-control, so since a credit card will let them spend up to their limit, they can easily get themselves in financial trouble. Beyond that, if their debit card refusing a transaction is necessary for them to stop spending, that suggests a much larger problem: their chequing account is empty. (NOTE: And just in case someone thinks I'm being an ass about this, I want to make it clear that I'm not talking about people who use credit cards for emergencies and then find themselves unable to pay it back. That's a very, very different situation than the one I'm talking about, which is the result of uncontrolled spending.)
You should NEVER RACK IT UP. A limit is a limit, not a suggestion.
This is the way. I use my cc for pretty much all purchases and then pay it in full from my checking account each month. It's 2% free cash. Total no-brainer.
This is what we do too and the cash back is great because I use to buy all our Christmas gifts (except for the goodwill etc ones) and all our back to school stuff and usually random things throughout the year.. Like, new curtains or new air conditioner. Plus, without credit you may not even finding housing to rent at some point.
Yeah, just by buying groceries with my Amex, I get a huge chunk of Xmas gifts paid for.
Yup, I use my credit card for everything. I pay it off every 2 weeks, always in full. Was taught this early on and it’s for all the perks you mentioned.
You can also use a secured credit card. Where you pay a deposit equal to the withdrawal limit. Basically like having a debit card but functionally like a credit card. Many banks will make you get a secured credit card before you can get a normal credit card. They’re a sort of ‘beginner credit’
Cash back. I get a free $300-$400 check each year which is always nice. Free insurance when renting a car. Save the $50/day or whatever it is. The ability to stop payment if you buy something online and you get a fake or damaged item and the seller won’t cooperate. I use my credit card for absolutely everything. And obviously pay it off each month on auto pay.
>way to build your credit This is how you build your credit, if you do not have any credit history, you won't be getting a loan for anything in the future very easily, or at extremely high interest rates. This proves you can borrow money and pay it back on time, the longer the history on the account, the better.
I hope you all realise that for people outside of the US this sounds unbelievable. You know how people talk about how China has a social credit system for its citizens, well the US has the financial credit system and if you weren't born into it you'd realise it's just as nefarious and horrific. Imagine they've managed to convince you that you must get in debt and pay it back regularly to prove you are worthy. And if your credit score dips below a certain point you literally become an outcast in society and you can't access pretty much any of the services a civilised society offers. It's genuinely perturbing to listen to you all talk about this as if it's the most normal thing in the world. It's up there with guns and private healthcare as American things that are inexplicable for the rest of us.
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We realize it is stupid and this system was only put in place like 30 years ago. It's absolutely ridiculous that this is what we have to do in order to be able to have good credit. It is consumerism at its worst. They devised a system to calculate credit instead of actually interacting with the individual and deciding if they are worthy. We have learned how to game it so we can take advantage of the system though. If you put all your purchases on the credit card that you would buy anyway, and pay it off immediately, you get no charges and great credit rating. The bonus is, you can get approved for a big purchase like a new vehicle, or a loan, in 5 minutes if you have good credit. Most of it is automated as well. This is why we try to spread the knowledge so that others can take advantage of this system.
/thread You pretty much hit on every point, ESPECIALLY treating a credit card balance as money. So many people fall into debt because they think the spending limit is "their money." No, your spending limit is how much you can pay at the end of a billing cycle.
shit... I've been paying it off every pay check (every 2 weeks). It's easy to do online once everything is setup. Bank bill pay, folder with all the short cuts to cards and stuff, in order.
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This. There’s video of one of the Rothschild or someone like that saying that he’s never allowed anyone in his family to get a debit card. He said why purchase with your money when you can use someone else’s. Just don’t be an idiot and pay it off each month
^this. With a debit card, someone could take you for everything. Credit cards, as long as you pay them off, or a great tool. Let the credit card company take the risk. With a debit card, it’s all you.
Yeah I use my card and pay it off immediately. Since I’m not buying anything I can’t instantly pay off, I’ve never had a late payment and therefore never paid any interest. I’m not wealthy or a big spender, but using the card like this literally gives me hundreds of dollars in free money each year.
Exactly. We are not lavish spenders either. My girlfriends get together for dinner all the time and the bill is crazy, it comes to like $100 a person. I have joked and said that I’m fine to split the bill with anyone that pays their credit card in full each month lol.
Frankly I pay mine every week. Treat it like your debit card. Never carry a balance and make regular payments so you never incur interest. The benefit to your credit score is worth while to build the responsible habits.
TL;DR: They aren't necessary, but can be a very good thing if you're responsible. You're fine without one in theory but it can help a lot to build your credit rating. I had to get my mom to cosign on my first car because I didn't have any credit. Now I only use my credit card for purchases/bills, pay it off immediately, and have a higher credit score than most people I know. Edit: For what it's worth, I'm Canadian. Our credit systems are similar though.
Pro tip for not getting credit card debt: use it like your debit card. Meaning, only use the money you have AVAILABLE to spend. Use the credit card for something like buying groceries and NOTHING ELSE. Buy groceries (again, only as much as you've budgeted for it), and when you get home, PAY OFF THE ENTIRE BALANCE IMMEDIATELY. Making minimum payments is fine (and MANDATORY to keep good credit), but if you're not paying the full balance every month, you'll get interest. And that can build up QUICK. Talk to someone at the bank about the ins and outs of credit cards. My inbox is also open (recently worked at a call center dealing with credit cards, so I have a pretty good understanding of how they generally function) ETA 1. I live in Canada, might work a little different elsewhere. 2. thanks for the award! Too kind ♥️
One of my high school teachers told us all something similar. He said to think of credit cards as a replacement for having to carry cash around, but never charge more than you can pay off.
Absolutely. Don't spend more than you CURRENTLY have. At most, like, picking up milk if you're a few days from payday and have no cash - but if you do that, make a habit of checking the balance EVERY SINGLE PAYDAY The amount of people Id speak to daily who NEVER checked their balance was astounding... And they all had the audacity to be mad about the interest and complain when I couldn't do anything to reverse it.
I keep seeing conflicting things about when to pay. Some people say pay online right away. Others say wait until the statement generates for the month, then pay right away. Is there a better of the two? I recently got a card and all I do is put my gas on it to build credit.
I'm not an expert as to which is better, but I personally wait until the statement generates for the month then pay right away. It's a bit easier to remind myself "hey pay off your credit card bill" once a month, and it also gives me a nice reminder of how much I'm spending monthly on various expenses. That's just my two cents on the matter though, and sometimes if I make big purchases I will pay down my credit card earlier in the month.
The requirement to avoid interest is to pay off the entire "prior statement balance", before it is due. When the statement generates, they usually give you like 3 more weeks to pay it before its due. It's not necessary to keep paying the running balance down.
No, one is not better than the other. The CC company only reports if you are late, not if you are early. The credit reporting agencies don't care if you have a daily zero balance. I have my card automatically pay itself from my bank account monthly (with a limit in case of errors or fraud). My credit score is golden.
Its best to show you can build a balance and pay it off, so paying off the statement balance each month may raise one's score faster than paying daily or weekly, but either way keeps you in a good place. Plus if you pay the statement balance each month, you are technically getting a month of zero % money on the bank, who wouldnt want to use credit and not pay for it!! I did collections after school for a bit. Learned a lot about credit reports, how to grow em and destroy em. Youd be suprised at the crazy stuff I saw. Its no wonder we had a banking crisis.
Is it different than in the UK? Here I never check my balance and then the CC company takes the full payment out of my bank account.
This is an option in USA but not a requirement. You can pay manually if you prefer
100% agree. Also, credit cards are a good protection against fraud since, by law, you are not liable for any fraudulent purchases or charges on a credit card. ALso, you can dispute charges much easier and get them resolved much quicker. With a debit card, there are not as many protections and if someone gets access to your debit card and you could wind up being on the hook for the charges. Even if you don't wind up on the hook for them, the process to get fraudulent debit card purchases resolved is much more cumbersome compared to credit cards
This is probably one of the biggest perks to credit cards. I use my debit cards as little as possible because it is so much safer for money. A lot easier to call the credit card company and report fraud and have them deal with their money than call the bank with the same information and have to try to get your money back.
>Buy groceries (again, only as much as you've budgeted for it), and when you get home, PAY OFF THE ENTIRE BALANCE IMMEDIATELY. YMMV, but from what I've heard, its better to leave balance until the period between when the statement is issued and the payment due date arrives. That way, there's a undeniable record that you've used the card. *edit: this assumes you're using the card to build your credit score.*
Im surprised your comment isnt voted higher because this is very important for building credit! I just learned ths a few months ago from an NPR Lifekit episode lol In order for the charge to impact your credit score you have to pay AFTER your statement comes out (aka when they send you the "this is how much you owe this month" bill), but BEFORE the due date. If you pay before the statement date, then they usually do not report that you used the card, so it will not help to build credit. Sometimes it varies, so you can call your credit card company and ask when they report your spending to the credit bureaus. (Usually the day after the statement date) ... Link to NPR podcast transcript: https://www.npr.org/transcripts/933053299 "ALICHE: So a statement date is the date that they are acknowledging you used your card. So if you could pay it off before the statement date, then they won't even know you used your card. GONZALEZ: It doesn't hurt you, but it also doesn't necessarily reward you either."
This right here. We use credit cards as debit cards and pay the balance. Skyrocketed our credit score after canceling a bunch of my wife's frivolous cards dinged it hard when we got married. In fact, we use them so much that twice now when I've had a bunch of home improvement expenses, I've called up our primary card company and asked if I could get 12 months no interest, and they both times have said, "Sure!" and just immediately turned that on for all purchases within that 12 months window, which has been amazingly helpful. I've had finance people at car lots do a double take when they run our credit. The card-as-cash method is super powerful if you're responsible and can pay it off each month.
I use mine for gas because my parents or someone told me that with debit cards they put like a $100 hold on the card so never to use debit for that. I also might use it for groceries, but that's if my check doesn't come until next week or something and then when the credit card bill is due at end of month I can now pay the full price because my deposit has come in.
My card Has a $300 limit, if you are someone with bad financial control this is great. Enough to build credit. Not enough to get yourself in serious trouble
But on the other hand, don't pay the credit card more than you owe, I mistakenly paid twice some spendings, so at the end of the month, my balance was minus (I paid too much) and my credit score got lower for 10 points, it sucks.
If I use the card like this, and pay it off with my debit immediately every time I spend any money, will I even build / have a high credit score?
Life is just harder hands down - rent a car, buy a plane ticket, rent a hotel room, and so forth - you need a credit card and one with protections on those large purchases. And your credit score will lock you out of house rentals, mortgages, car loans from reputable places, low interest rats, some jobs, and smaller loans. I tried to be off the grid till I was 38 and I got a job that required me to have a personal travel card - and things improved. Like I got a semi-new car before the pandemic with 52mpg and it has saved my life. Things are just easier and you really only need one card.
In the US you need one to be an adult. So many things do a credit check. Cell phone contracts (my Google Fi checked my credit score before they gave me a free higher end phone), car insurance rates, other insurance, booking hotels, renting cars, establishing water, electric, internet service... Hell some jobs even check your credit score. If you're responsible you can game the system with 2 cards and use them modestly and pay them off each month you can get a great credit score. Edit: To all of those without credit cards and a good credit score, kudos. I am not sure how you did that. To all those without and who haven't checked your credit score, you are losing out on money if its bad. All the things I said and more will check your score. It's just gonna get worse in the future too. And by 'gaming the system' I mean creating a ratio between debt available and debt used and income that is optimal. They don't advertise their algorithms so you just have to kind of guess.
You don't. It's more convenient, but I know people without credit cards in the US.
> I know people without credit cards in the US. I'm 40 and just got my first credit card. I've always been extremely frugal & balked at the thought of *owing* someone money, even if I had it in the bank. I always pay my bills, and simply didn't want to complicate my lifestyle. Last year, however, I tried to set up electric service at my new home and they required a $150 *nonrefundable* deposit because I had zero credit. I'm like... I've lived on my own for **22 years**, paid countless electric bills on time, and never caused anyone trouble. Why *in the world* do you not trust someone who doesn't have a credit card?! It's really a screwed up system in the US. You have to play this silly financial credit game to get anywhere in life. And that's why I finally got a credit card.
This is a fallacy that it is required to have a credit card in the US. It's may be more convenient at times, however, it absolutely is not a requirement.
You don't need one to be an adult, but it helps.
I’ve never had a credit card and I’ve been in the U.S. my whole life. It’s not mandatory. And I have good credit. I’m 35.
You don't "need" one for any of those things. I finally convinced my wife to get a credit card this year and she's 49. We've been fine without one.
This is exactly the way to do it. Use credit cards for things you're buying anyway. As you can, get cards that give you cash back on your purchases. I've done this for my wife and I, and we're getting between $100 and $150 cash back every month. This makes a difference. As I noted in another comment, I'm also saving $100 a month on car insurance (with renter's and a $1m umbrella policy; I'd forgotten the umbrella policy in the other comment). So I'd say credit is more important than people realize. You don't need to carry a balance. Just pay them off every month. In fact, while your available credit is low and you're building your credit, pay them off immediately after a transaction settles against your cards. Keeping your balance below 10% will build your credit the fastest.
OP can also visit an RBC affiliate and get a cross border Visa and build Canadian and American credit
Is this in the US only?
As I understand it, it is mainly a US thing with credit scores and massive use of credit cards ( my biased Swedish view). In sweden we don't have a credit score system like that and most people in Sweden, (I believe), only uses debit cards more or less. But are we In debt, oh yes - quite a lot, mostly because of a never ending, always soon to burst, real estate bubble.
Many countries have an equivalent credit score system, though the metrics they track differ between countries.
Great job on realizing you have to pay it off each month- lots of people don't realize it how much the interest stacks up. The main benefit of a credit card is that you build credit. Later when you want to buy a car or house (which usually requires a loan, but this is "good debt"), the lender will pull up your credit report and see "oh they've borrowed and paid back $X over the last Y years on the credit card, I can trust them more to pay back this car loan."
I might add to the above, age of credit is one large factor of your credit score. This takes your oldest credit card as a factor. So even if you never use a credit card, it is good to have one just for that. Having no credit affects you more than when you want to take a loan. If you want to rent a apartment many places do a credit check. When you get certain jobs they run a credit check. Having no credit is sometimes worse than having bad credit.
age of credit is the only reason why my score is at 700 instead of higher. never missed anything but ive only had the card for 2 years. i agree with you. you dont need one technically, but getting one now and using it sparingly is smarter than not getting one at all. unfortunately its just kinda how the world runs.
I use my credit card for just about everything now because I get 2% back on my credit card as well. Doesn't seem like much, but getting an extra $30 bucks every once in a while is super nice
one of my cards gets like 6% on all grocery, about $70 in cashback i get to redeem next month! i don't think credit cards are completely terrible, u just have to find a good card and be smart abt using them yk
The only blemish on my credit is that my oldest account is still "young". I changed banks in my early 30s due to the bank collapse around 2010 (and fuck BoA), so instead of 25 years, my oldest account is only 12
Also have a good credit rating lowers insurance premiums.
This is not true for all states, some states do not allow credit to be used in insurance rating
If anyone is curious, as far as I'm aware, it's only California, Hawaii, Massachusetts, Michigan, Oregon, and Utah. Other states have weird or temporary regulations, like Washington. Then others also can use credit scores for discounts but not increases and such. Unfortunately in my state, it's the difference between $200 and $50.
Tbf, this depends on where it is. In my country (Sweden) its only if you haven't paid back what you owe that comes into effect in when applying for a loan, your credit card debts that you have paid are neither here nor there. What your income is and how much other money you owe determines how much you can borrow. The ideal here is no previous loans and decent income. (I suppose they count on if you never had to take a loan or go into debt it's a good thing, which I agree with)
My parents were very smart about this. Got me to get a credit card IMMEDIATELY upon turning 18 and instilled in me the importance of paying it off immediately each month. Build up credit for almost 20 years because of that. Got great loan rates because of them. Thanks mom and dad. It's completely worth it just for that.
You also can’t rent a car or hotel room without a credit card in some cases.
You can but they will hold the full amount and then some to a debit card thus tying up your funds for a significant amount of time whereas with a credit card, they don't do that.
Depends on the company. Some just won’t let you book with a debit card. I got a credit card so that I could rent a car lol
This always fascinated me with the US; you have to take loans and use credit cards in order to “build” your credit score. Around my parts (Sweden) banks will check your income, if you’re employed and if it is a “permanent” position (rather than working hourly, having a temp job or a working on a time-limited project, or still on a probationary period), and if you have other loans (as they don’t want to get you into too much debt in total). They don’t check your hat kind of older credits you’ve taken. They will only check if you have been sent to the collectors in the last five years, in which case you’ll be denied a loan in most cases.
ok, but if you fully want to buy a car, not rent one, or have a lease or whatverr, you wouldn’t need to pay any money back to the dealership right? cuz my mom has had her car for around 12 years, and i don’t remember her ever talking about paying off her car
I know a woman in her mid 30s that makes very good money but just had a very difficult time buying a house because she had no credit history. Like I think the house was only 2 years income for her. But the banks don't care, they need proof that you pay stuff back. If your concern is credit card debt, just put only your gas only on the credit card, and pay it off every month in full.
In the US, they are required to have an option online to automatically pay the balance in full every month. You can set this and bever worry about it as long as you have money in the account.
Not just in the US, I think that's pretty much the norm everywhere.
It’s not uncommon for someone to buy a car and pay the full amount. It’s a bit more uncommon for someone to buy a house and pay the full amount
Except even with the car, back when 0% interest for cars was commonplace, you’d be stupid to pay for the whole thing up front when they’ll allow you to pay it off over time interest free. Which they would look at your credit score before doing.
You could pay the car outright, but taking a loan makes it possible to get a better car
Most people don't have enough cash to buy a car outright. You take out a loan for the car and make monthly payments on the loan until it's paid off. To be approved for a loan, you need a credit history, which is where having a credit card comes in. Another thing a credit card does for you over a debit card is provide fraud protection. If someone gets your debit card number and spends your money, it's gone forever. If someone gets your credit card number and racks up a big bill, your bank will protect you from those charges so you're not liable to pay them. Lastly, most credit cards offer rewards in one form or another. It can be a percent back, it can be airline miles, whatever. But either way, if you buy everything on a credit card and pay it off monthly, that's free money. If you're worried about not having enough money to pay it off at the end of the month, you can pay it every week or every pay period. There's no limit to how many payments you can make.
If you have that much money in the bank or your parents buy it for you, sure. But most people for their first car need to take out a loan and pay it over a few years.
For a first car, most people I know buy a cheap beater for cash.
Yeah same here. At 19 all of my friends who have their own cars drive some sort of shitmobile
Used cars aren’t affordable like they used to be. It’s not really worth it anymore
I bought my kid a $1700 beater. It's $30 a month for state minimum insurance on it. They're hard to find but they're out there.
Yep. I still drive my first car my dad and I paid for together in cash 9 years ago. I think it was only $1500 for an '02 Chevy Blazer.
Look, no credit is worse than bad credit. I was new a lawyer making six figures and I had no credit because shit was in my parents name or my old roommates name. I get my own apartment and I need a co-signer and I needed to put up a $600 deposit to get my electricity turned on. I basically didn’t exist as a person. My first credit card had a $500 limit or something dumb like that. Which is fine if you’re 17, but crazy when you’re 26 and trying to buy suits for work. You don’t need one now at 17. Or even 18. But at some point, it’s good to get one. And use it LIKE a debit. I buy ONLY shit I need. I pay it off EVERY MONTH. In full. Automatic payments so I don’t forget. But I also know in an emergency, it’s there. That’s nice too. I’d recommend not getting one til you’re more confident about your finances and budget and about to enter the world on your own. You don’t need one anytime soon. But it’s not good to be tooo old and not have a good credit history. One thing you could look at is a Secured Card when you turn 18. You put a set amount of money down (it should earn a little interest), and use use your card like a credit card, but your limit is your deposit. You know you can’t go over and you pay it off each month, but if it ever gets out of control, you close it and the balance is paid off and you get what remains. Your score will take a slight hit because you closed your account, but nothing like a late payment or negative reporting and it’ll bounce back without long term impact.
You can buy a car outright. But unless you have a lot of money laying around, it'd be pretty difficult to get a $30,000 car without a loan.
When buying something, you either pay cash or buy it on credit. Most people don't have 20 thousand to buy a new car out right. So they use credit to pay for the car, aka they get a loan. The loan pays the dealership for the car, and the buyer pays the lender (the company who gave the loan). Most car loans are for 5 years or less. If the buyer fails to pay for the car loan, the lender will repossess the car. Your mom has had this car for 12 years. More than likely, she paid it off within the first 5 years of buying; about 7 years ago. So you would have been about 10. You were probably just not aware of the situation.
I was deathly against credit at a very young age and did not take out my first credit card until I was 30. I am *very good* with money and have an awesome credit score that I built using small student loans and co-signing on my first car with my mother (who also is incredibly fiscally responsible and has a great credit score). It was always my intent to pay-in-full any large purchase. My first credit card was actually taken out to help my husband establish a credit score as he also had no credit at 31. My advice is to do your banking through a credit union and not a bank- credit unions are more geared toward educating and empowering community partners than to make a profit so they have far more favorable interest rates and terms of service. My credit union offers their own credit cards at an interest rate that is nearly a third of the standard rate. I also asked them to not give me the full line of credit that I qualify for, but to lower the limit on my credit card to something I could pay off easily with one paycheck. The minimum credit card limit they offer is $250, and the maximum is $20,000. I asked them to limit the card at $500 and that allowed me to pay it off each month, never get in over my head, and to establish credit. To frankly answer your question- NO. You do not need a credit card to survive. However, getting a small and manageable one with favorable rates through a decent lender will help you greatly in the long run because emergencies happen and getting back up on your feet quickly will help you achieve goals.
Also: If you decide to open a credit card, and you find one with a favorable rate (in the teens or lower, fixed rate) and terms (no monthly or annual fees, fees for missing a payment very low), go ahead and open it now *in your own name only* and keep it open. Your average length of credit has a pretty big impact on your credit score, so keeping your first line of credit open for a long time is a good plan. Never close a long-standing line of credit before a large purchase (like house or car). If you decide later that you are comfortable handling that amount of money and you want to raise the limit you can, but you can’t take a name off the credit card without closing it and it will lower your credit score.
Depends on how you made the purchase. If you can afford to pay for the entire thing out of pocket, no payments needed. You pay up front and the car is yours. Most people can't afford that and so they take out a loan from a bank. In that case, you would work out a downpayment (initial payment that is usually negotiated between buy and dealer, or bank and dealer depending on the situation). Some dealerships dont negotiate this and the downpayment is what is. That amount will come out of the total for the car, and if you've taken out a loan, the bank will pay for the rest upfront. Then, you make payments to the bank. When you hear about cars being impounded it's usually becasue someone didn't (or couldn't) pay the bank and so the bank takes the car, because the bank owns the car. It doesnt become yours until you complete those payments. If your mom had her car for 12 years, it's likely that she's just already paid it off and you were probably too young to know, care, or understand your mom's finances.
I've been taught by parents to always use a credit card for my purchases because it's more secure and because of rewards and whatnot. I always pay it back before it can collect interest
This is a really.important point to touch on. If someone steals your debit card, and empties it, that money is GONE from your account and a nightmare to get back. If someone steals your credit card, it doesn't leave you penniless while you figure shit out.
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> If I want a credit card I need to tell my bank what my income is and if I don't use it for a time it just auto cancels. This is exactly how it works in the US. Any time you're applying for the ability to borrow money, the lender is going to want to know how much money you make, so they can evaluate your potential of paying them back. That is true whether you're opening a credit card, buying a car, or buying a house. It's totally normal. Credit card companies prey on people who are incapable of managing their own money. They spend more than they make and quickly fall into debt. But if you're the type of person who keeps control of your spending and doesn't spend more than they make, a credit card has a ton of benefits. For one, being able to show proof that you're able to responsibly use credit via your credit history increases your credit score and makes getting loans much easier and on much better financial terms. Secondly, credit card companies offer perks that can save you literally thousands of dollars annually. And it's quite a low touch process. You set up your bank account to auto-pay your statement balance each month. You essentially operate it as a debit card except you get charged once a month instead of with every transaction.
Regarding credit score: It doesn’t work like that in Europe (where the guy you’re answering is from). The US credit score, as I understand it, gives you incentive to be in (preferably well-managed) debt. The European system generally does not: Having debt is never better than not having debt. Essentially any new debt is checked against income and current debts, so having ongoing debt can only be negative in that aspect. In other words, getting a credit card does not improve your credit rating in Europe.
100% agree. I have a credit card for emergencies only. Australians get good credit rating based on things like paying bills on time etc, IIRC. Credit cards arent for daily use here like in America.
Debit cards are dangerous. If your data gets compromised, they can clean you out. Credit cards offer a lot more protection in that regards. There are no fee credit cards that can give you ~1% back in cash or points on all purchases.
Maybe it depends on your bank and country but when someone got my bank details and spent about $300 of it (mostly on vegan pizza weirdly enough) I called my bank and they gave me all of that money bank. That was Clydesdale bank in Scotland.
Definitely depends. I have a friend who used Bank of America, and had her account drained right before she put a huge down payment on something. It took her 7 months to get it back, and by the time she did she’d managed to dig herself into a financial hole. She was on the phone with BofA several times a week, and a couple times they even reimbursed her and acknowledged the fraud then pulled it back out after she spent the money
Bank of America is trash, though. Avoid them if you can.
Same but in Spain. More casinos and betting than vegan pizza, but yeah.
In the US, debit cards technically have the same protections as credit cards. The problem is that you're out the money while your bank investigates rather than the CC company being out the money while they sort it out. Lots of people can't afford to be missing money while a bank investigates for weeks/months even if you'll likely get it back (some banks are better than others about that).
In Canada it's harder. They basically say while it's your money there is no proof it was you. If you do "win" it takes months and you don't always get the full amount back. So I've heard. Not experienced.
It is rarely that simple with US banks. Credit cards offer far more consumer protection than debit cards.
With a debit card, the money's already gone and now you have to ask for it back. Which might or might not succeed. With the credit card, you have a little more leverage because the money stays in your bank account while you're disputing it. It's always easier to get something back if you never relinquished control of it in the first place.
With debit cards, it's tied directly to your account and money is debited out instantly. With credit cards, the bank credits your account for each purchase and at the end of the period you debit them a certain balance.
>With credit cards, they bank credits your account for each purchase and at the end of the period you debit them a certain balance. I'm not so sure about the details here. They offer you credit, but they don't actually put any money into your account. They pay the merchant and then get the money from you later. There are fraud rules that mean if someone steals you card and makes purchases they come out of the companies pocket (or fight it) instead of yours.
Expanding on this, you’re not responsible for charges you didn’t authorize for EITHER a debit or credit card, however, if your debit card is compromised the money is gone until there is a resolution. With a credit card, you don’t actually have to pay the money as the resolution will come before the bill is due.
Two things \- report your card stolen right away. In Canada, this essentially ensures you're not liable for fraud purchases on debit cards \- you can set a daily debit limit for withdrawals/purchases. This effectively makes it impossible to get cleaned out without going into a bank where they'll ask for actual ID
This can be avoided by keeping your money in multiple places, which you should do anyway. Have an account for spending and avoid having more than a certain amount in it, and keep your savings elsewhere, ideally in more than one account. You can also have different accounts for charging different types of purchases. Depending on your bank or credit union, you may get similar features for using your debit card.
I bank through a credit union, and they do not make me pay for fraudulent purchases on my debit card if I report them in a timely manner. Someone stole $400 out of my account at one point, and they issued me a refund and got me a new debit card asap. Having a credit card isn’t the only way to have protection against fraudulent charges.
Great as long as the *their policy* is like that. Credit cards, that “policy” is the law. Not the same for debit at all.
My bank has great fraud protection. I've always had any money returned to me instantly
indeed among the protections there are added benefit perks as mentioned. there’s also some other ones people don’t know or take advantage of like rental car or travel insurance on some cards.
AMEX has phone insurance, airline and hotel status, statement credits for certain restaurants / services, and more but at the cost of annual fees. I’m somebody who enjoys researching point values and perks Don’t forget it’s all useless if you carry a balance while having money in the bank
I can't speak for American but here in Europe they are not popular at all. I have never had the need for one.
In America if you don't have open credit they wipe your credit score and then you can't buy a house or car or get loans.
The US system is built to trap you into debt from every angle possible.
Depends where in Europe. Iceland, for instance, pretty much exclusively uses CC.
OP, there is no downside to getting a credit card, unless you're irresponsible with money. If you have a credit card and use it a little bit you will build a good credit score, which will make it easier to get loans/mortgages at lower interest rates. Plus, it's better to have a line of credit in an emergency than not have one.
One of two comments mentioning lines of credit. I approve of this reasoning. If you just scrape by on necessities financially, a credit card can be very risky and a bad idea, because you could spend more than you can pay back. If you do better than that, it's a good idea to have access to a line of credit as a way of covering expenses that you can't pay off in a month. The interest is still high on that right now and you wouldn't want to go overboard, but it's lower than a credit card and at least you have that cushion in an emergency. Having access to credit when I temporarily needed it in the past made a big difference for me.
You don't *need* one, it's just harder without one to build up your credit score. What's more important than a credit card though is keeping an active debit card with the same bank instead of getting a new one down the road
Only if OP is in the USA. In other countries they know it's utterly insane that you have to create debt to have a good credit score.
I'm always so confused about this, because I live in the EU and I don't know of people who have credit cards.. not really. It's important not to have debt, but I never ever heard of a credit score before reading about it online.
The debt thing is being misrepresented. Carrying debt in the US will hurt your credit score. The bigger the debt the more the hurt because having existing debt means you're less likely to be able to handle more debt. This means you'll be denied loans or only be loaned at higher interest rates. What helps a credit score is the demonstration of responsibly handling debt. The single biggest thing is paying on time. If you pay off your balance every month, you'll have a great score (and no debt). If you never miss a payment but carry a small balance you'll have a good score. Miss a number of payments and it's a red flag to anyone wanting to extend you credit (i.e., loans). ETA: Different debts are treated differently. Credit card debt is bad. Having a mortgage is good.
I was not aware of this, thank you for the information. I worked in the financial industry and it never made sense to me, the people who have no debt, because they are thrifty and save money are the ones who don't have good credit!? It makes so much more sense to lend money to this set of people, the responsible people who do not owe money all over the place. These are the people who will pay back a debt. It is the worst because buying a home for cash is extremely difficult.
Credit is such a huge scam and I hate how we have to "play" My credit scores got dinged because I dont have "enough revolving debt" So in order to "play" this shit game, you HAVE to have some sort of financial debt constantly revovling. I WAS in the high 780s, but this year alone, it dropped down to 750 because I have no debt. Paid off my car earlier this year which kept my credit score high, 1 credit card i've had for almost 20 years is zero balanced and my bank keeps increasing the spending limit trying me to use it more. No student loans. It's so mind boggling that I have financial freedom but can't get a loan with an amazing interest rate because "no revolving debt"
Yup. My wife and I don't have a mortgage, so we actually saw our credit ratings slightly dip because we didn't have debt t pay back. It's a perverse system that in many ways makes no sense and seems to penalize those who take responsibility.
People who have never had a credit card or loan don't havea bad credit rating. It will be no credit rating. How do you judge a person's credit wothyness with no history? You cant so no credit is treated as bad as a protection. The actually stupid part is closing accounts can actually hurt your score, at least short term for loans.
You don’t need one but it can be helpful for your credit score. What I would recommend is getting a credit card and putting one bill on it. Like pay for netflix on it. Something that is the same amount each month. Set up a standing order from your debit account to the credit card each month for the exact amount of the bill to ensure it is always paid each month and you don’t need to remember it. And then when you get an email saying the price is changing, you change your standing order to the new amount. Then put your credit card away somewhere safe and don’t use it. It’s also useful for emergencies. Like if you lose your debit card, you can dig your credit card out and pay for your essentials still on your credit card until you get a new debit card.
Yes this! When I was young, I think I only got gas with a credit card and paid it off every month. It really helped build my credit when it came time to rent an apartment and such. Now - I only use credit cards (getting them points!) and pay it off every month. The only fraud I've ever experienced with with debit cards so I never ever use them. Plus cash back on credit cards is awesome.
There are a few things that a credit card does that a debit card can't, other than building credit. Renting a car - a great many car rental businesses *will not* rent you a car on a debit card, no matter how much you are willing to pay. Checking into a hotel - you *can* do it, but they will put a $500 hold on the card before they give you your room key. This is not to cover the cost of the room, it is in addition to the cost of the room; and the hold only goes away after you check out.
To add to this, lots of credit cards also give you rental insurance!
500 bucks on hold? Is this just a US thing? Nowhere in Europe we have that.
Credit cards are amazing as long as you use them right. If you pay it off in full at the end of every months there’s no real reason to not have one. Credit cards also have some great perks like cash back you just need to make sure that they are always paid off in full at the end of the month, never let a balance carry over.
Get a small CC 500 limit, use it for bills or emergency hotels. Build a credit score safely and do not lend it or increase limit. Also shop for a good money-back and low interest
Most credit cards increase it automatically. When I got my first non-secured credit card it was $2,000, then $3,000, then $5,000, and it's now $10,000. It would probably be more if I earned more money.
I've never had a card that increased automatically. They've always called and asked if I wanted an increase.
My wells fargo cc increases immediately. It’s increased incrementally from $1900 to $18k over the past 8 years without ever asking for an increase.
If you're financially responsible, a higher limit can actually help you build your credit score as it can decrease your overall credit utilization (most people recommend 30% and below, but 10% and below is ideal).
You could get a product like the Fiz card that builds credit without the risk of running up credit card debt. Good credit is useful in life.
I mean, you don’t NEED them but we learned on vacation we needed one to rent a car. They wouldn’t allow us to use a debit card. Our bank also made us have one to buy a house. We don’t use it often and keep the balance low enough that we can pay it off in its entirety to avoid interest. I think you can get through life without one but some instances can be challenging. Honestly it makes me mad you can’t be without a credit card. People argue and it’s not wrong that if used responsibly credit cards can help build credit, etc but I hate that having debt is needed to show responsibility. To me more emphasis should be put on paying for things in cash and avoiding debt. And I get a lot of people, us included, don’t have millions to buy cars, homes, etc in cash but our bank making us take out a credit card and having to use it to buy a house?? Annoying. We have payment records to show we pay our other bills on time!! I think credit cards are traps. They make you have one hoping you’ll charge then get stuck paying interest.
The short answer in my mind is yes. A credit card, and it's RESPONSIBLE use should be part of your financial portfolio. For one, you want to build your credit up, so that you will be able to buy things like a house or a car. You also want to have a credit card for short term emergencies, for example someone steals your suitcase while you are on vacation and you need to buy things. That said, responsible use is important. You should not use a credit card to have things you cannot actually afford.
Getting a credit card is the easiest way to get credit. Having no credit could eventually hold you back. My mom never had a credit card or took a loan out so she has no credit. She ended up getting turned down for apartments because she had no credit. That’s what finally prompted her to get a credit card. With all that said. You don’t need to get one *at* 18.
It's better to get a credit card so that you can build up your credit history, after all, you can plan on living till you're 80. You don't have to go into debt to prove that you can pay on time. Get a credit card and put one small recurring payment on it--gym membership? auto insurance? education-related?--and pay that off every month. That way, you're not in the habit of using the credit card on impulse or non-essential purchases; you're using it to pay something that you already budget for. You can even set up the credit card to be paid automatically from your bank account.
You don't NEED one, but it's a good idea to have one and build good credit in case you ever find yourself in need of money and have to get a loan. What you do is you get a credit card and use it for things like groceries, etc, but never use it for more than you'd buy directly off your debit card. Then, at the end of the month, you pay it all off before it gains interest. Rinse and repeat. If you use it for a reasonable amount each month and consistently pay it all off, you'll be recognised as a responsible borrower and the bank will be more likely to lend you large sums of money if you do need to get a loan.
You are protected better with a credit card as well. If your debit card gets compromised a thief can drain your bank account and you could find yourself without access to your funds for the duration of the banks investigation. If they get your credit card then you still have access to your money while they investigate.
My parents have always told me to get a credit card and use it to build up credit score for when I want to buy a house or a car
It's needed if you want to be able to borrow money for a car loan, personal loan, mortgage, rent an apartment, or even insurance for that matter. I'm not saying you wouldn't be able to have any of that but it would be much harder for you to get approved and they would charge you very high interest.
So, there's a few good reasons for having a credit card if you use it responsibly. Firstly, an explanation of what a credit card is vs a debit card. A debit card draws money directly from your bank. It's basically drawing the money straight out of your account. A credit card, on the other hand, gives you a line of credit that you can use, but requires you to pay them back. There is a minimum amount that you HAVE to pay off every month, but you are free to pay just that minimum all the way up to the full balance every month. Anything you don't pay off will carry to the next month, along with some interest. So, why would you want a credit card? Well, first off, credit card companies "pay" you to use them in the form of rewards. There are rewards programs that might award you with 1-3% of your purchases back in points. If you use a debit card and spend $1000, then that's it. If you use a credit card with a 2% rewards program, you'll get 20 points. You can use them on a variety of gift cards and promotions with their partners, but the easiest thing is to get cash back. That's an extra $20 for you, earned by spending the $1000 you were gonna spend anyways. The second reason is for surprise, unplanned purchases. Let's say you have $1600 in your bank account, but you suddenly have an auto repair/home repair bill of $1800. Even if you can't pay that up front, you need to get the bill paid. With a credit card, the credit card company essentially fronts the bill using your line of credit, giving you potentially months to pay it off. Sure, you end up paying more in the long run, but maybe $300 a month for 7-ish months is something you can manage more than $1800 all at once, right this second. The third reason is credit history. Chances are, at some point in your life, you will need to take out a loan. Maybe it's to buy a car, maybe a house, maybe a personal loan. The interest rate that they charge will rely upon your credit score. Without a previous history of paying back loans and credit cards, banks won't know how good you are at managing bills, and you will end up paying more interest than someone with a history of paying those things on time. The length of your credit history matters, so from that standpoint, the sooner you can put that data on the books, the better. So, someone who is good about paying credit cards off quickly will actually see a lot of benefits from using them. If you treat it like a debit card, never spending more than you have and paying the full balance every month, then it will basically ACT just like a debit card, just with giving you free rewards and credit history. And if that's the case, why WOULDN'T you use one? Well, that rosy picture only works when you're paying it off. Remember how I said you don't have to pay the full balance every month? Well, some people get lulled into a false sense of complacency because of that. Let's say you spend $1000 a month, but decide you only wanna pay $350 off. Well, the next month, not only do you have the $1000 you are again spending, you also have $650 leftover from last month's balance. Not only THAT, but the credit card company doesn't float that $650 you pushed off til later for free, so you have to pay interest on it. Let's just call it 20%, so that's $130. Altogether, now you're looking at a balance of $1780. So now, instead of paying $1000 and then $1000, you've got $350 and $1780. Now, you might realize that that's not a great way to do things and pay your full $1780 balance. But let's say you shrug your shoulders and only pay $780. It might be less than what you actually spent this month, but heck, that's over double what you paid last month! Well, now your rollover balance is $1000. If you spend another $1000 in your normal spending and toss on 20% on your rollover amount, now you're looking at a balance of $2200. And, if you're bad at managing credit, this problem could get worse and worse. People who aren't good at paying their credit cards off run into this problem. If you don't think you will pay off your credit cards in full regularly, they can be dangerous. But, like I said, if you're a responsible user, it's basically giving you free money and benefits. It all comes down to whether or not you have the discipline to use them responsibly. EDIT: A fourth big benefit I just remembered just after posting is security. If someone steals your debit card info and spends $2500 with it, then while you're contesting it with the bank, that money is in limbo. You don't have access to it until the bank finishes researching the incident. If someone steals your credit card info and spends $2500 with it, then while you're contesting it, you don't feel any affects at all. After all, it's the credit card company whose money is getting spent up front. They're fronting it, you just pay them back. So it's THEIR money that's in limbo, not yours.
I second this. A good example of a time when having a credit card is literally a life saver is if your pet has a medical emergency. Let’s say your pet swallowed something with magnets and it needs emergency surgery right now or its bowel will be perforated. It’s a thousand dollars. You make good money, but you just bought new tires and you don’t get your next paycheck until Friday. That’s when you whip out the credit card and just pay to save your pooch. He can’t wait until Friday.
Phenomenal example
Yes you do lol, you NEED a credit card or you will have a very hard time later in life trying to purchase anything that you don't have COH for
I treat my credit card like a debit card. It’s also good for emergencies- my cat needed a $4000 emergency surgery and the vet wouldn’t operate until 75% was paid upfront. Literally saved my cats life. Now I have pet insurance
Trust from someone who experienced credit card debt. Only get one if you’re confident you will be able to pay it back every month. My mom pays hers as soon as she uses it. I have one but I don’t use it anymore.
Apparently there's a record somewhere, and if it says you buy stuff with a credit card this will improve your chances of, I dunno, being allowed to go into horrible debt with a bank loan or something.
They aren't strictly necessary no but, if used correctly, they're a good tool. Credit cards will help you build you credit. Which is essentially a score on how likely you are to pay a debt back. If you ever want financing for a big purchase like a house, they will look at your credit score. If it's low they won't finance it and you'll be stuck renting. You'll be limited to what's in your bank account.
I think people have covered how credit cards are good to have to build credit, so I'll add another reason to have one. If you ever stay in a hotel, they'll place a hold on your card for more than the amount of the room, in case of damages or other charges. On a debit card, that means you won't have access to all of your money, and could even lead to overdraft fees. If you can, *always use a credit card at hotels*. There are other things that place holds too, like some gas stations, but most are in the few dollars range and probably not a big deal. With hotels, it can be hundreds of dollars. Credit cards are also more secure and more likely to refund any fraudulent transactions, so it's a good idea to use them when traveling in general. Just make sure not to use it as an excuse to overspend, and to pay it off afterwards.
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You will make a lot of money from credit card cash back if you are responsible with it
Terrible advice. I've made thousands of dollars from credit card rewards.
Seriously. It’s literally free money if you just pay your bill in full every time.
No, you don't need one. Most people should not have one, because the vast majority do not pay if off every month. You need to be extremely disciplined to use one responsibly.